Monthly Archives: Aug 2016

Clients are being subjected to such a load of nonsense about the impending impact of robotics and cognitive computing on enterprise jobs, many are literally terrified. Conversing with the "head of automation" for a F500 organization today, is akin to meeting a Secret Service agent in a clandestine alleyway. These people do actually exist, but most have to conduct their work under a veil of secrecy, due to the level of discomfort and panic our robo-commentators are making in the presses.

Remember the panic about jobs getting shipped offshore? Well, that is child's play compared to the emerging tumult of fear being generated by jobs being completely eliminated by robotics. Net-net, people are frozen stiff with fear, and it's the responsibility of respected analysts, consultants, academics and journalists alike to educate and world using real, substantiated facts. Sadly, the likes of Gartner, McKinsey, Oxford University and our beloved Stephen Hawking, all seem hell-bent on capitalizing on the panic to grab the headlines (read my post earlier this year) as opposed to dispelling much of the ridiculous scaremongering about the impact of automation on job losses.

At HfS, we published a very thorough analysis on the impact of automation on global services jobs, showing there is likely to be modest downsizing of ~9% over the next five years as low-end tasks are increasingly automated across major service delivery locations. And this 9% will be immersed in natural attrition and redeployment of workers to other industries, as global services streamlines and matures as an industry. Yes, there will be impact, and it will be somewhat painful to absorb for some enterprises, but it's not the impending workforce apocalypse these people are predicting.

So why, pray tell, is Gartner, a respected voice in IT research, continually pounding us with continual scaremongering that we're all doomed to the will of the robot, and we may as well start preparing for a life of unemployment, or sandwich making? Oh wait, robots can even make sandwiches, right?

Peter Sondergaard, Gartner's Head of Research, predicted one in three jobs will be converted to software, robots and smart machines by 2025. OK, that's so far out in the future, I think Peter's on pretty safe ground here - he's probably going to have cashed in his Gartner stocks long before then, in any case, and be on a golf cart somewhere, when one very earnest soul decides to dig into the Gartner archives of previous decades to read very old research, with very dodgy predictions, that absolutely noone care about anymore. So we'll let Peter off the hook here - he wanted to make a splash at his Symposium and he achieved exactly that.

But then we get treated to this almighty whopper from Fran Karamouzis, a vice president and distinguished analyst at Gartner...

By 2018, more than three million workers globally will be supervised by "robo-bosses". Wow - isn't this barely more than a year away? Excellent, so Fran's going to be around to declare automation glory when global employment goes through a robo-geddon so seismic, it'll be like all three terminators visited from the future at once to change the world? My god - what is going on here? The suggestion that an employee will be supervised by a machine simply cannot be corroborated by any meaningful research...

So why do we, at HfS, view claims like this as factually incorrect and irresponsible?

There is only one very shaky example of "robo advisors" in the industry. The most cynical implementations of automation that HfS has come across, thus far, where direct replacement of human labor by robots is the declared outcome, are examples such as Royal Bank of Scotland, where virtual agents, deployed as “robo advisors” are solely deployed to replace FTEs. We've also witnessed a service provider radically downsizing some delivery staff claiming success of its robotics strategy (only to find out later these staff were simply redeployed elsewhere). Let's be honest here, the onus so far seems to be about firing people and using "robotics" as the smokescreen. While Intelligent Automation decision-making will undoubtedly increase (view our Continuum here), we see no examples of employees being supervised by bots. At HfS, we are covering every deployment in the industry, and are just not seeing it.

We still haven't had a real debate on the ethics of automation and cognitive computing in the B2B environment. Suggestions that employees will be supervised by bots can be traced to the broader discourse on Artificial Intelligence, where more consumer-facing technologies are discussed with undercurrents of movies, such as the Matrix. These discussions tend to focus on technology capabilities of providers like Google and Facebook. However, we haven’t seen a similar debate in the B2B space. If anything, the B2B urgently needs a debate on the ethics of automation, in light of these nascent cognitive capabilities. But to surmise that robobosses will be so prevalent in barely over a year before we've even had these debates is quite absurd.

The speed of internal organizational change is painfully slow. The tendency from clients with automation is to pilot first, rather than to go full scale, and every ambitious forecast is always waylaid by the reality of interacting with legacy systems. Most of today's Robotic Process Automation(RPA) tools are simply being retrofitted into smoothing over manual processes within legacy technology environments with obsolete processes. They are adding efficiency to broken operations, which may, in the future, lead to a lesser need for headcount in low value work areas. Talking about today's enterprises being so close to investing in Robo bosses is just very wide of the mark. What's more, much of this RPA technology has been around for more than a decade - this stuff isn't exactly revolutionary, it's just becoming more popular as enterprises figure out further efficiencies beyond initiatives such as offshore outsourcing and shared services

Cognitive tools are only just emerging. While IBM has done a stellar job aligning its Watson capabilities with the healthcare industry (read our report here) and software experts such as IPSoft's Amelia and Celaton have some compelling client stories to tell, the focus on self-learning and intuitive cognitive solutions are mainly confined to customer service technology and virtual assistant chatboxes. Talk to the call center BPO providers and they're really only just figuring this out.... forget robobosses, we're still just trying to figure out some basic software to make chatboxes work better these days. Moreover, with Watson, our research shows it's best application today in the medical field is helping flesh out the bad science and saving scientists serious amounts of time doing their research. Meanwhile Celaton, in the UK, has created a really cool tool to help Virgin trains handle emailed customer queries. But the long and short, here, is that Intelligent Automation solutions today are great at augmenting processes and unstructured data pools, not replacing real people who make real decisions doing real jobs.

The definition of robo bosses, and the potential value, of robobosses is missing. There is, however, something to be said for the value of increased automation combined with analytics to better understand the impact — measured by targeted business outcomes — in a more realtime way during a contract with a “gig economy” worker (or any worker). Such knowledge can help us intervene and train/coach a project “going south” sooner, or catch fraud fastest, or identify a worker to “gets it faster”. Along these lines, we see value in "robo advice", but the point also needs to be made that these "robobosses" (give me a break) do not work alone, such as with Watson and health / medical diagnosis and treatment, they work in tandem with doctors / clinicians, changing and refining the dr/clinician job (freeing up that person to be more targeted and more of a coach than a statistician) with the intent of better medical results. These robo tools (or whatever we call them) do not replace the doctor / clinician.

Monitoring software has existed for decades... so when does it become a "Roboboss"? Currently, there are probably a million or more workers just in the UK (for example) managed by extreme monitoring of some kind. The Amazon style warehouse pickers, fast food cooks, many call center agents, delivery drivers, assembly line factory workers are subject to time monitoring and computers giving them tasks. We're just not sure when this turns into a roboboss?

Bottom Line: The real "roboboss" is the human worker who can use Intelligent Automation tools effectively

It today's swirl of gibbering noise around the social media presses, it's the responsibility of leading analysts, advisors and academics to be the voices of sanity and reason, when it comes to topics as critical as the future of work elimination through Intelligent Automation technology. The vendors love the hype as it gets them attention with clients, but analysts who like to take money from these vendors have a responsibility to articulate the realities of these technologies to their clients. They are great at augmenting work flows, and even aiding medical discoveries, but this is the real value - it's not about sacking people. It's about making operations function better so people can do their jobs better. The real "roboboss" is the human enterprise operator who can use smart Intelligent Automation tools to enhance the quality of their work.

Net-net, industry analysts, advisors, robotics vendors, academics and service providers need to engage with clients around how all these disruptive approaches will affect talent management as well as organizational structures. Even without these apocalyptic scenarios, some job functions are likely to either disappear or be significantly diminished (as our 9% forecast reveals). Equally, we need to talk about governance of these new environments, touching upon ethical, but also practical, issues. This is not only a necessity for the broader adoption, but also offers high value opportunities.

I'll probably get a few nasty messages as a result of this piece, but I sincerely hope this has the outcome of steering our industry conversation in a more realistic direction, backed up by real data and experts who prefer realistic conversation that mere headline-grabbing and panic creation.

A special shout out to Cartoonist and Innovation evangelist Matt Heffron for penning this little gem:

We set out a few weeks' ago, with support from NASSCOM, to test the views of service buyers, advisors and providers on what the BPO industry needs to do to make the leap from delivering mere efficiency to one that can provide genuine strategic value to clients (if this is indeed possible).

As we filter through the first results, what immediately leaped out at me was the following:

Clients want more women leaders and real case studies... more than anything else

"Why are these providers and advisors dominated by boring men in gray suits?" bemoaned several clients at one of our HfS Summits recently (where more than half the buyers executives present were actually female). This is a serious issue, folks. Our industry has - somehow - become dominated by too many dinosaur service provider executives with their lavish air-miles accounts and two iPhones* (why do some people insist on having more than one iPhone? Are they really that popular?), who have, at the same time, somehow lost all records of actual client success stories that justify their new vernacular around "digital transformation" and "automation".

In fact, during one service provider briefing last week (which will remain nameless), we asked an executive to explain how he defined "Digital Transformation" (after many utterances of said phrase) and the poor chap was positively floored that he was asked to define what he was talking about. These people seem to be obsessed with recanting the vogue buzz phrases, without the need anymore to know what they really are. Can we just call it "technology" again and go back to sharing real examples of how technology can enable and transform client performance? Can we just explain what all this hype is surrounding automation and emphasize that most of today's RPA technology has actually been around for more than a decade in many shapes and forms?

Here, it's abundantly clear that we need to see more women - and, dare I say it, more youthful executives, who can simply connect better with the clients. Everything has become so dominated by the men in gray suits, who talk in increasingly more impressive riddles that are becoming increasingly distant from reality. Moreover, we need to dispel much of the hype surrounding automation and jobs impact: Gartner's unsubstantiated claim that "more than three million workers globally will be supervised by robobosses in just 18 months' time", is simply irresponsible and unprofessional. It's time to make it real and drop the hype and scaremongering...

The Bottom Line: It's time for progressive change from within to break ourselves out of this legacy holding pattern

The industry has spoken, and it's not pretty - clients are fed up with the same old selling, the same old unsubstantiated hype and the same old cronies dishing it out. Change only comes when we look at progressive change, not successive change. This means we must stop making the same old mistakes by replacing jaded middle managers with more faceless middle managers with a hype-upgrade; this means we must stop plastering out turgid marketing that was really a rip-off of the other ten competitors, with a different logo slapped on it.

We need real people selling and delivering our solutions, who can listen to what clients need and can really empathize with them, who are diverse across the genders, the age groups and the ethic backgrounds. We need to start talking real English again, and less of the manifested garbage we can't resist spewing out to mask our insecurities. As our whole 2017 research theme at HfS is centered on... it's simply time to start making everything real again and redefine our industry as something that is geared up for our clients' real needs, not needs we are trying to convince them they have!

*In full disclosure, the author of this article has been seen once sporting a gray suit and did possess two iPhones for a brief period of time. He has since changed his ways...

Perhaps the best example of the evolving As-a-Service delivery model that immerses all the value levers of global delivery; namely offshore talent, cognitive automation tools, analytics and the digital customer experience, can be found in the burgeoning mortgage processing industry. With banks going all out to sell highly competitive mortgages at record low interest rates, the onus to manage the whole process both efficiently and intelligently, while battling all the regulatory demons, has never been so great.

Two years after our inaugural Blueprint in Mortgage BPO Services, we took a fresh look at this industry… here’s announcing the findings of the HfS 2016 Mortgage As-a-Service Blueprint, led by HfS banking analyst, Reetika Joshi.

The concept of delivering mortgage As-a-Service, using plug and play digital business services is still in its infancy. We’re not quite at “push button, get mortgage” as an industry – and the verdict is out on whether this is the right message to send for a lending environment that is still rebuilding itself, seven years after the 2008 housing crash. How do you do this without raising eyebrows? You’ll have to ask Quicken Loans, as they learn from the backlash of their Super Bowl campaign with that very slogan.

Reetika, how do you view the 2016 Service Provider Landscape?

Our HfS Blueprint methodology assesses service providers based on two critical axes: Execution and Innovation. We gather data to support our analysis from client reference interviews, market interviews, RFI submissions and exhaustive service provider briefings.

In this Blueprint, we identified four As-a-Service Winners: Accenture, Cognizant, TCS and Wipro. These service providers have the strongest vision for As-a-Service delivery in the mortgage industry, and are driving collaborative engagements with clients to bring this vision to life. They are making significant investments in future capabilities in automation, technology and borrower experience to continue to increase the value over time.

The High Performers in this year’s Blueprint are a highly competitive set of service providers: Genpact, Infosys, ISGN/Firstsource, Sutherland Global Services and WNS. They have high execution capabilities and are growing their client bases as a result of investments in future capabilities and innovation. These service providers have the pieces in place for As-a-Service delivery, and need to focus on consistently bringing these capabilities to clients and scaling up with broad, multi-client solutions. We expect them to challenge the Winner’s Circle leaders in the next couple of years, with each building on unique strengths and assets in this vertical.

We see Unisys and Xerox as the Execution Powerhouses. These service providers are strong in operational excellence with ubiquitous technology platforms in their respective markets, and need to focus on value chain expansion and innovation in their services stack:

Why does mortgage needs to have a different approach and response to “digital disruption”?

Despite this sensitivity, other industry forces still march on; regulation, homebuyers and a new breed of disruptive fintech firms are steadily shifting the entire mortgage industry towards generally being more digitally enabled. Lenders have this big ask today: how to carefully balance their investments in new technologies, with changing consumer needs, volatile rate

As someone who has profited very nicely from social media (I helped build an analyst company with blogging and social at the heart of our culture), I am probably not the most appropriate person to speak out against the negative side of social media’s impact. But, as Gerald Ronson once famously espoused to the editor of the Guardian newspaper, “Opinions are like arseholes, everyone has one”, I just can’t help myself, so I’ll give you mine…

2008 was a financial disaster fueled by greedy bankers; 2016 a political disaster fueled by social media wankers. Opinions on politics. My god – back in the day, people pretty much kept quiet on their views until they had some facts to back them up. Today, they just have a bloody opinion and want to get it out there, regardless of whether they can justify it or not. When they get into an argument, they just try and shout louder, rather than listening to reason. David Cameron has been guilty of one of the biggest political snafus of modern times, where he went to the public with a complex decision to be made. Instead, all he succeeded in doing was allowing every opinionated idiot with a twitter account to air his or her views on society at large, until the vote become one about him and the establishment and not whether Britain should remain in the EU. (And you wonder why Hitler loved referenda…)

All social media has achieved is providing a platform for people to spout off unsubstantiated rubbish, as opposed to a collaborative opportunity for them to learn more about what’s truly going on in the world. Then we advance to the lovely US media and the most insufferable election in history, where reality got somehow lost in a maelstrom of hype, tweets and many unsubstantiated facts that really dumb people actually believe. All I can say is that I cannot wait for the election to be over so we can actually get back to some normalcy of running a country again.

The tech and services industry has complete lost itself in the socially-driven hype. So let’s reflect on what happened to our industry over the last couple of years. For a while, social media was fun – we could debate the trials and tribulations of real services and real technology and how to improve ourselves. Suddenly, the facts have got lost somewhere are we’ve arrived at this dark place where it’s more about who’s making the loudest noise than who’s talking the most sense. Every supplier of tech and services talks up “Digital” but never defines it – with few to no clients to reference their capabilities. They talk “automation” with little clue how to do it, with (again) no clients as reference points. Myself and my team have sat through hours and hours of deathly dull briefings where we’ve actually had analysts bemoaning the fact that the providers failed to brief them on the subject at hand. It’s really that bad.

The Bottom-line: It’s time to find our way (somehow) back to reality

Let’s be brutally honest - we’ve all lost the plot. Why are tech and service providers so obsessed with sounding the best as opposed to proving they’re the best? Why do so many analysts and consultants just parrot each other, as opposed to having real opinions and real substantiated viewpoints? Why have so many enterprise buyers buried their heads under the bedcovers, scared to come out until someone dared to explain to them what this new bullxxxt was all about?

It’s time to make things real again… we owe it to ourselves and our clients to talk about how buyers/end-users adopt these emerging solutions - what are they doing, which processes are being impacted, what outcomes are being achieved. We need to focus on real industry dynamics to learn why is digital so relevant to retail; omni-channel to travel; block chain to banking; cognitive to healthcare etc. We need truly to understand and articulate how today's workforce grasps these emerging concepts and drives them in practice - how can experienced professionals reorient their capabilities, and the younger generation be embraced into the workforce? What are the career progression plans in these areas? While technologies advance, how are staff advancing (or failing to advance) with them?

Unless we really dig deep to stop using our social foghorns to spout the loudest and start focusing on being the more real, we are truly doomed to a future of increased stupidity, naiveté and confusion. It’s time we all broke form these habits and refocused on what is really happening in the world.

We're excited to fly over some of the HfS star analysts to meet with the delegates at this year's NASSCOM BPM Strategy Summit, where HfS is the exclusive content partner with the theme "The Next Big Goal - From Effective to Strategic, can BPM get this one Right?". And the more discerning of you will notice that the theme is centered on HfS' own Eight Ideals of the As-a-Service Economy.

So what are you waiting for? Book your flight and place now!

Venue: Hotel Leela Bangalore

Date: 22-23 September 2016

And if you'd like to meet with some of the HfS team, drop us a quick note and we'll see what we can do.

For the first time since Al Gore and Donald Trump founded the Internet, I am braving a few days in the analog world on a camp-site up in Canada somewhere. In fact, I don't think this place has even undergone analog disruption yet...

Question: Why are we becoming so obsessed with Automation and As-a-Service relationships?

Answer: Because outsourcing has worked so effectively, we can now look to new levers to pull to find that next threshold of value

Question: Will the next person who says “Outsourcing is just so Passé" get a punch in the face?

Answer: Yes

Barely three years’ ago, we were still lamenting that nagging lack of innovation in outsourcing relationships and the inability of service providers to deliver those transformational delights to their clients after they had come through with their promised cost savings. But let’s face it, the FTE-based labor arbitrage model has really worked – and a lot better than we thought it would, during those heady days of offshore screw-ups. I can barely remember the last time I sat on the receiving end of a group of clients throwing their service providers under the bus because they couldn’t get the procure-to-pay transition right, or got caught sneaking through change-orders to fix their dodgy coding.

Service relationships are more stable than ever, but focus is shifting to As-a-Service delivery and Intelligent Automation

You only need to look at the intentions of 371 major enterprise buyers towards their outsourcing contract renewals from our new Intelligent Operations Study to get the picture that this isn’t an industry in delivery turmoil, about to self-combust because deal flow isn’t growing at quite the clip it was a couple of years’ ago. In fact, only one-in-four IT services clients today are even considering ditching their current partner, and a even lesser proportion with their BPO provider. However, many do want to make the switch to As-a-Service contracts:

The focus on automation is the logical next phase of value once stability of global service delivery has been reached.

The availability of smart automation tools and platforms from the likes of Automation Anywhere, BluePrism, IPSoft, Nice, UIPath, WorkFusion and Redwood have really been conversation catalysts to get the automation conversation to the table. In fact, most of the buyers we’ve been interviewing in our current Intelligent Automation blueprint are still in the

Usually when there is an acquisition in the tech/services space, you can always appreciate why the deal was done; no matter how cynical you try to be, there is always some gold in there to dig out.

However, in the case of Dutch staffing giant Ranstad buying the shriveled remains of a legacy resumé-based online recruitment firm that made its name during the dot-com days, my reaction is simply one of “Why? Just why?” The business was cratering (albeit slowly, but steadily) in a world where most people just don’t use Monster anymore to do their recruiting and job hunting—it’s a business from a bygone era. But there’s always someone out there ready and willing with the ego to resurrect a dinosaur (or a Monster in this case). So I asked the question to our HR-as-a-Service analyst, Mike Cook, to give us the answer...

Mike, Is there a Monet in the Monster or has LinkedIn already Rinsed the Shop?

Phil, Once Randstad blows off the dust from Monster, will it like what it finds? In the thrift shop of the recruitment market there are treasures to be found but in a market that has been turned on its head by the LinkedIn juggernaut, there isn’t much left.

In its strategic priorities for 2015-2016 Randstad aimed to capture positive growth opportunities as well as be in the top 3 scale positions in each market it participates in. Over the last 12 months this strategy has been bearing fruit—following the acquisitions of twago, Careo Group, Obiettivo Lavoro and RiseSmart.

However, these acquisitions have just been dwarfed with Randstad announcing the acquisition of one of the true veterans of the online recruitment market—Monster, for $429 million in cash. This represents a sale price of $3.40 per share, a premium of 63.7% over Monday's closing stock price. But it's worlds away from Monster's $8 billion market cap achieved in early 2000. With much of the market questioning the 47% premium Microsoft paid for (a still extremely relevant) LinkedIn (see post), one should wonder about the wisdom of paying such a price for a site that is declining in popularity.

Monster was one of the original online recruitment leaders but has struggled to stay ahead of the pack and has lost significant market share in recent years. Direct competition is fierce in this industry and recent acquisitions, such as Indeed.com taking over Simply Hired, have highlighted this.

So what does this acquisition mean for Randstad?

Bolsters Randstad’s staffing and RPO capabilities: The increased footprint this acquisition gives Randstad should prove beneficial and provide improved service delivery to the provider's staffing and RPO clients. However, the value of Monster's candidate database is questionable. Unlike LinkedIn, which users update regularly, job seekers usually abandon job search site profiles when they're not actively searching for a role.

Raise Randstad’s profile, particularly in the US: Currently Randstad’s US operation accounts for around 20% of its revenue. Considering its aim to be in the top 3 of each of its markets, the acquisition of Monster with its US-heavy revenue model (70% revenues from North American operations in 2015) may make sense.

Outside of these takeaways, it is difficult to see the value for Randstad in this deal. Monster looks to be the pensioner still wearing high tops, shades and a tank top, with its platform now largely outdated and its market share no longer what it once was. The likes of LinkedIn have disrupted this market to such a degree that legacy online recruitment sites are struggling to survive. This bid for survival is being played out in the massive consolidation currently taking place in this market. The one card that online recruitment sites still have to play is in the contingent workforce market, but with Microsoft is looking to steamroll its way into this area, through LinkedIn—and the forecast looks less than sunny.

HfS readers are used to us relentlessly preaching the inexorable journey toward the As-a-Service Economy. And you still aren't get familiar with the Eight Ideals, then you must have locked in solitary confinement for the last year...

But there are many missing pieces in that big jigsaw. Service management, while unspectacular, is a critical component of the digital underbelly of the OneOffice as HfS has termed it. As ServiceNow is aiming to expand the notion of service management to evolving into the “third estate between CRM and ERP,” providing a new cloud-based level of efficiency between front and back office, we have asked our Intelligent Automation expert in residence, Tom Reuner, to take stock as to where the ServiceNow ecosystem has advanced to.

Tom, there appears to be a buzz around ServiceNow in the industry? Is the hype justified and where does it fit in strategically for buyers?

Amidst the marketing noise in our industry, ServiceNow still stands out. And that, Phil, is quite an achievement as service management is really not among the sexiest of topics. You can see that in thousands of developers and partners having made their pilgrimage to Knowledge 16, ServiceNow’s customer event in Las Vegas this year. Crucially though, ServiceNow has

Anyone with a real history in the services industry will be familiar with the insights of one Christine Ferrusi Ross, who spent many years leading the services and sourcing practice for Forrester Research, during the firm's heighday. And in pre-HfS days, I used to enjoy meeting Christine for lunches when we would bemoan the state of the research analyst industry and what needed to be done to revitalize how analysts do research. Little did we realize back then we would be able to shake up the analyst industry together in an analyst firm not beholden to the whims of their paying suppliers and analysts confined to covering tiny slices of software markets. So when we got the opportunity to bring Christine, or "CFR" as her colleagues like to call her, to help shape our events and research strategies, it wasn't a difficult decision... especially when you hear her views about moving to outcome-based contracts.

Welcome Christine! Can you share a little about your background and why you have chosen research and strategy as your career path?